Reference no: EM131626088

(1) What powers does the board of directors have? What is the source of their powers?

(2) From the information provided, determine the correct title or role of the individual described:-

a) I draw a wage and work within the company. I do not own shares and take my orders from management.

b) I own a slice of the company. At general meetings I can vote and if the company makes profits and declares dividends I have a right to claim a share.

c) I make strategic decisions about where the company is going. I am not employed full time but rather I am paid a fee for the services I provide.

e) I live close to the main factory where the business owned by the company makes its products and I am affected by the decisions made by the company.

f) I oversee compliance of companies with the company laws of Australia. If the company or one of its officers breaks the law I may initiate prosecution of the offenders.

g) I am the main contact person for those wishing to contact the company. Keeping and maintaining all company records is my responsibility.
At directors meetings I control the agenda that is discussed and ensure all procedures are followed.

h) I am not appointed to any official position yet my instructions are followed and I make decisions about issued related to the strategy and management of the company.

i) I manage the day to day running of a company. I am responsible at the strategic level and the management level.

j) I am a full time member of the board of directors and ultimately in charge and responsible for the performance of the directors.

k) I represent a group of people who have requested that I manage their financial assets. I have used those assets to become a part owner of the business. My main concern is the return I generate for my clients.

3) Mr. Shift, Ms. Avid and Mr. Margin seek your advice on establishing a new company. You advise them not to bother with their own constitution, but instead to rely on the replaceable rules in the Corporations Act. Advise who should be appointed as directors of their company in view of the following information:

(a) Mr. Shift states that he does not want to be appointed a director or secretary. He suggests instead that his family company be appointed as a director; and that the company not have a company secretary;

(b) Ms. Avid is currently unavailable for meetings as she has five months still to serve for her last conviction for falsifying company accounts;

(c) Mr. Margin is 80 years old.

(4) Assume that Mr. Shift's family company subsequently goes into liquidation. In her report to ASIC, the liquidator states that the secured creditors have been repaid in full, but the unsecured creditors will not receive more than 20 cents in the dollar. The liquidator does not find any evidence of wrongdoing on the part of Mr. Shift or any of his fellow directors.

What (if any) ramifications does this have for Mr. Shift assuming that ASIC's records show that Mr. Shift has, over the last nine months, had a similar track record with two other small proprietary companies?

(5) Do you agree with the proposition that "non-executives don't run the company's business from day to day and only ever contribute at board meetings and for this reason they serve no real purpose."